Which 403(b) vendors do you see brokers and TPAs utilizing for unbundled 403(b) plans? Service has been an issue for our existing block of business with some of the larger insurance providers and we are looking for a replacement. Any insights would be greatly appreciated. Thanks!

An employee is currently on her spouse's insurance in which he can drop her at any time for any reason (ie no qualifying event). She would like to do this and sign up for our coverage (not open enrollment).

If I remember correctly, an LOC under a spouse's coverage is a qualifying event to add her - no matter what the reason she dropped from his coverage. Is this correct? I've been out of the benefits loop for while and getting a little rusty!

Thanks, Greta

Hi.

Has anyone gone through the EBSA VFC program to correct late deposit of EE 401(k) contributions to the plan's trust? The info on the website mentions that to encourage the use of the program, that the DOL has granted a class exemption providing "LIMITED" relief from the excise taxes under IRC.

If anyone has gone through this program, can you define how "limited" the excise tax relief was?

It also appears that there is no fee to use this program. Is this true, or is there a cost? In addition to favorable relief of the excise tax, I like the fact that you also walk away with reliance from the DOL that the plan would not be subject to a DOL audit down the road (for this specific delinquency).

I look forward to hearing from people about this program.

Does anyone have experience filing through the VFC Program? I've read through March 28, 2002 Federal Register to determine how to file. I've also read something published by Corbel indicating that if the employer self-corrects using the VFCP methodology and foot notes this on Form 5500, Schedule I, that should be enough to satisfy DOL. I would appreciate hearing some opinions on whether just to "self correct" or file the full blown application. Thanks.

I have a top heavy age weighted defined contribution plan. Is a minimum 3% contribution required if no other contributions are being made for the year?

Line 3(g) of 5307 ask if the Plan provides for disparity in contributions....that is intended to meet the permitted disparity requirements of §401(l). The plan is a volume submitter §401(k) that provides for a cross-tested allocation formula. My guess would be to answer yes as permitted disparity is most likely used in the cross-testing formula, but there's nothing in the document(a Corbel document) which addresses permitted disparity. I recall there being actual language regarding permitted disparity in the PSP and MPPP documents. Any suggestions?

I WANT TO BUY IBONDS AND PUT THEM IN A ROTH IRA. IM LOOKING TO AVOID THE TAXES LATER. IF I START A ROTH IRA WITH IBONDS AND THE FIXED RATE INCREASES WILL I BE ABLE TO SELL THE LOW FIXED RATE BONDS IN THE FUND WITHOUT PAYING TAXES AND BUY HIGHER FIXED RATE IBONDS? I UNDERSTAND I MAY HAVE TO PAY THE 3 MONTH PENALTY FEE. IS THIS A GOOD IDEA FOR A SAVINGS PLAN?

To all you wise benefit pros.....

This is the scenario:

An S-Corp would like to establish an HRA for its employees by funding a trust at the end of a calendar year for the following calendar year. The S-Corp would name itself as the trustee to the trust established for the HRA.

Question: Would the S-Corp.'s contributions to the HRA trust still be tax-deductible ?

I can not see any problem with establishing an HRA in this manner but I really need some feedback!

Any suggestions?

HELLO,

I HAVE BEEN OPENING A ROTH IRA FOR 3 YEARS NOW AND HAVE YET TO GET STARTED .

CAN ANYONE GIVE ME SOME ADVICE TO GET STARTED AND MAY BE HELP ME THROUGH THE PROCESS.

THANK YOU

DEAN

We have a participant who had a $40,000 balance and borrow $20,000 (rounding numbers of course). He has made a couple of payments but now says he has a family emergency and needs to take a hardship w/d for $9500. The plan permits loans and hardships.

The only real question I have is can he now take the $9500? Does it in any way violate the 50% rule (can only take 50% for a loan of vested balance) or does the 50% only matter on the day the loan is made????

Thanks for any input.

For the past 10 months, the media has run multiple stories about investment risk and being in "safe" investments. "Do you know where your money is?" The pundits (with the possible exception or Rukeyser) have made a lot of "tut tut" type remarks emphasizing being in cash, investing in "solid" companies, "conservative" investments, and there was all that stuff about dividends and taxation. A scan of Money, Worth, Kiplinger and other financials mags would show an overall negative tone.

What has actually happened? Lets look at the statistics for Oct 9 through the last Friday in July the approximate returns have been:

S&P500 up 28%

DOW up 29%

Russel 2000 up 31%

Nazdaq up 58%.

Any my point is?

Did anyone tell you that last October was a turning point in the market? Did they tell you the best single performing segment would be the top 100 Nazdaq stocks (like Intel, Microsoft, Cisco, Dell, etc)? I think it was quite the contrary, too much doom and gloom. Where were all those supposedly smart people telling the public that it was a good time to invest in equities?

My point is that markets run in cycles. It is near impossible to time "the market", to know when to jump in and when to leave. Equity (aka stock) investing has a lot of short term risk and volatility, but over the long haul has historically provided excellant results. Some folks wait for "proof" and invest after the market climbs and panic when the market swoons - the results are ugly.

In Dec 4 on this message board I said:

"While the stock market has been down for 2+ years, investors in bonds have done very well. CDs have more or less kept pace with inflation. All of this is highly irrelevant to the long term performance of various asset classes in the future. You should not make investment decisions based upon the instant snapshot of market conditions. Neither you nor I can have any certainty where real estate or stock market values will be 1 year later, but we should have a good sense for 20 years down the road. The long term annual rate of return in the stock market is in the 9-12 % with the low end being a balanced portfolio with some bonds and the upper end being a mix biased towards growth. Some people beat that range, some don't."

The experienced investor has a better chance of understanding these cycles and for the most part ignoring them. I hope by posting this message, which is a little off topic, it will help less experienced investors to understand the market dynamics and make better decisions.

If an employer has a significant rate increase at policy renewal midyear, can an employee drop health coverage and therefore prospectively change the cafeteria health election on a prospective basis?

Our plan year for the 401(k) is not a calendar year. For testing purposes (ADP and Section 415) the fiscal year is obviously used. For the $12,000 limitation in 2003...would this apply to Calendar or Fiscal...or both?

My company has run into some financial trouble lately so I have seen my ESOP value decrese to $0 after being with the company for 15 years. I have only recently started to look at how my plan was administrated and I have found what I belive to be a major mistake.

My plan document has the following statement in the distribution article, "The balance of a Participant's Accounts shall not include any Company Stock acquired after December 31, 1986 with the proceeds of an Acquisition Loan until the Plan Year in which such loan is paid in full."

In 1998 a loan was taken out for the remaining 51% of the company. This loan should have been paid off in 2005. For years 1998--present when a participant "Put" his shares he was paid for his entire balance, old shares plus the new financed shares. I am in a heated discusion with my fiduciary telling him that according to IRC 409 (o)(1)(b) he should not be paying for financed shares. Those shares he does not need to start paying on till 2005. He will not listen and is in the process of terminating the plan ASAP.

I'm looking to recapture money that may have been overpaid. I reason that if my company plan is terminated, that extra money could be distributed to the remaining employees that have "old" shares.

HELP my retiement is in the toilet.

What does a Roth IRA invest in? Does it invest in mutual funds? Can I set up a Roth to invest in an index fund? Or am I way off here? Thanks for any help.

What would the minimum funding deadline be for a plan with a year ending on 1/5/03? I'm inclined to push forward the PYE 12/31/02 deadline by 5 days and say 9/20/03. Is this correct? Has anybody else had a similar question?

I have a client that has a Profit Sharing and Pension Plan. There is an employee who has become eligible in the plan and does not want to receive any benefits he is entitled too. Is there anything I need to do for that besides probably have the eligible participant and the employer sign something saying he wishes to opt out of the benefits???

I know, I said the same thing, why would you want to opt out???? Ha ha!

Thanks.

SEP Plan has three year requirement. Employee has three years and would be eligible for a contribution in 2002. Employee terminates in November 2002. Is the employee still eligible for the 2002contribution since no hour or last day requirement allowed in SEP?

Second - To utilize the increased deduction limit of 25% of compensation for 2002, did the employer have to have amended the plan for EGTRRA in 2002. If they sign in 2003, would the new 25% only be effective for 2003 contributions and the 15% still apply to 2002 contributions?

Do any firms that only do balance forward recordkeeping get a SAS 70 audit? We are getting asked for this by auditors a lot now. I know that daily firms that handle investments usually get them but we don't handle any investment transactions.

Would the answer change if your firm was agent of record?

Assume a 401(k) plan with a June 30 plan year end. Participant with the following employee 401(k) contribution history:

7/1/01 – 6/30/02 $0 contributions

7/1/02 – 12/3/02 12,000

1/1/03 – 6/30/03 14,000

7/1/02 – 6/30/03 26,000 (total deferrals for the plan year)

What would be the maximum profit sharing contribution for this employee for the 7/1/02 – 6/30/03 plan year?

A) 16,000 (able to use the 2,000 catch-up contribution)

or

B) 15,000 (because he already used 1,000 of his catch up contribution in the 2002 calendar year)